Litmus test for Take-Two Interactive Software Inc. (NASDAQ: TTWO)

Today, we are going to evaluate Take-Two Interactive Software, Inc. (TTWO) so as to get clarity on this organization and its current standing from a fundamental perspective. In that process, we hope to give some insight into what this stock may offer as an investment opportunity for prospective investors. To accomplish that, we will be moving from top to bottom in our evaluation. As such, our first point of focus will be a look at the company from a revenue perspective.

Over the course of the prior fiscal quarter, the company saw sales of 418.22M[3. Sales mrq]. That number needs context to grant us any insight: by comparison, we can see an overall change in revenues, on a quarterly year/year basis, of 0.26%. However, in sequential terms, the situation looks a little different, with sales decline by -0.37% from quarter to quarter. While revenue analysis gives us a strong sense of changing demand trends in the companys end market, and how the company is executing in terms of its relationship with potential customers, real shareholder value is only truly created by profitability. With this in mind, we turn to the companys bottom line data.

Take-Two Interactive Software, Inc. (TTWO) may offer even more interest as an object of analysis if we zoom in a bit more and look at some of its core trends. For example, the cost of selling goods last quarter was 201.63M, which yielded a gross basic income of 216.59M.

The companys recently reported data shows total diluted outstanding shares of 117.75M, which implies an overall EPS (or earnings per share) of 0.56. To give the reader a little context that number compares to an analyst consensus expected value of 0.82 in next fiscal quarter EPS data. Next, lets look ahead at coming performance based on what analysts are projecting for the company more generally, before closing with a survey of the balance sheet and cash flow. Among analysts, the average recommendation for this stock is Overweight. That number represents the product of the work of 22 analysts. It is important to consider the views of the analyst community even though we dont suggest taking analyst recommendations as face value plans for action in a portfolio. The primary value of looking at analyst opinions is in knowing what sort of views may already be priced into the stock.

If we look at price targets, we can see that analysts currently have things pegged around an average target at about 98.70. When we look at next year, we can things shake out in terms of estimates of a fiscal year forecast to bring about 4.32 in terms of total EPS. That works out to a median P/E ratio basis valuation of right around 25.23 times earnings.

So far, we have covered how the company is doing on both the top and bottom line, as well as what professional analysts believe about its core trends and operational and financial performance going forward. However, we would be remiss if we did not also take a quick look at cash flows and the companys balance sheet to round out our perspective on the name.

The last thing we like to look at for a company like is the balance sheet. That really is the heart of the companys ability to weather tough times, and the basis for an experienced investors sense of the real downside risk inherent in a stock. So, as we like to see, the balance sheet is the seat of faith for the market. In this case, for TTWO, the company has about 1.23B in cash in the bank, according to its most recent reports. That cash sits opposite about – in total current liabilities on the ledger. But balance sheet health isnt a fixed idea. Trends matter. And the best way to understand real risk, particularly where debt levels are concerned, is to trace a line connecting the past with the future. In this case, the companys debt has been falling. The company also has 3.22B in total assets, balanced by 2.12B in total liabilities. That should put things into perspective quite a bit more in terms of how one can justify the current market cap of the stock.

Finally, we want to take a peek at cash flows. In this case, the company saw free cash flowing at 8.42M last quarter, which represents a net change for the quarter in cash levels of (46.77M). That works out to about 49.89M in terms of cash flow on a net operating basis.

This is certainly an interesting story and one we plan to check back on soon.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of argusjournal.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please click HERE

Sunesis Pharmaceuticals Inc. (NASDAQ:SNSS) is a risky buy?

We turn our attention to the charts today. Technical analysis. It?s the artistic side of the analysis. Here, we deal with lines and angles and patterns. Here, we try to listen to the market; to hear its opinion of a stock, quite independent of the seeming facts of the business. Here, we look to paint a picture, as it were. Todays subject in this exercise is Sunesis Pharmaceuticals, Inc. (SNSS).

Let?s start with a quick evaluation of relative volume measures. Here, we want to examine the degree to which traders, investors, and money managers are more or less interested over the past month in transacting in this security. At this point, this stock has been showing weak relative volume, which indicates lack of interest among those participating in the market for shares of SNSS over the past month. That sets us up to look at relative performance of the stock along with range and volatility measures. This boils down to the concept of what is known as ?beta?.

First off, we can readily state the facts on relative performance. SNSS has moved +2.61 over the past month or so. Over the trailing 100 days, the stock is outperforming the S&P 500 by 266.56. As to the point of beta, we can see the stock has been generally moving more than the rest of the market on a day to day basis. That is according to the 36-month beta score. Another way to look at this is through taking the standard deviation of returns calculated as representing a hypothetical buyer of the stock at a random point at a given average price during the specified period. That gives us a historical volatility score of 72.13%. Finally, in this class of data, we can look at the 20-day ATR as a percentage of the 20-day moving average, which gives us a natural volatility score of 6.79%.

Now, it?s time to look at trend and extent of movement. From a certain point of view, these are the natural opposites in technical analysis. On the one hand, we know experienced traders and technical manuals teach us that ?the trend is your friend.? However, at the same time, we know it?s wise to fade extreme, overdone movement. That posits a natural tension for analysts, and unfortunately, the best we can do is to look at the facts.

In the first place, the broad impact of money flows should be viewed through the tried-and-tested lens of moving average analysis. In this case, we look at the relative positioning of the 50-day and 200-day simple moving averages. In other words, if the 50-day moving average is trading above the 200-day, it is traditionally seen as a bullish chart trend. Conversely, if the 50-day moving average is trading below the 200-day, it is traditionally labeled a bearish trend or bearing. For SNSS, that adds up to a bullish designation, which suggests that flows have been working in an overall positive direction on the chart.

To counter that notion, we now turn to a look at mean reversion oscillators. Our key indicators of note attempt to score the action as to whether or not a security has pushed too far too fast, leading to a likelihood of some kind of reversion to the mean movement becoming highly probable.

There is a host of oscillating indicators that can offer up such an analytic perspective. We have learned to rely most on RSI and stochastics. Specifically, we look at the 14-day Relative Strength Indicator (RSI) and the 20-day ?fast stochastic?. For both of these measures, if we see a score above 75 (overbought) or below 25 (oversold), history suggests one is wise to expect some reversion to the mean. For SNSS, the 14-day RSI shows a score of 84.59%, while the 20-day fast stochastic shows a score of 92.77%.

We close today?s analysis with a quick check of key levels. For our means, we like to quickly check the key Fibonacci retracement zone as well as the primary institutional long-term moving average (the 200-day simple average). In the case of is Sunesis Pharmaceuticals, Inc. (SNSS), the critical 38.2% level drawn off the 52-week high of $7.25 sits at $5.18. SNSS also has additional resistance above at the stock?s 200-day simple moving average, which sits at $ 3.03.

Hopefully, this analysis has offered up some useful perspective. We will catch up with this stock again soon.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of argusjournal.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please click HERE

Quad/Graphics Inc. (NYSE:QUAD) on focus

Today?s object of technical analysis is Quad/Graphics, Inc. (QUAD). After one does a thorough job of checking for chinks in the armor on the fundamental side, the work of due diligence is only just beginning. The next step is to make sure the technical character of the chart matches the story in an advantageous way. We will look at some of the key points in that analysis today for QUAD.

First off, when looking at the overall directional impact of recent money flows, we will use the relative positioning of the 50-day and 200-day simple moving averages. In other words, if the 50-day moving average is trading above the 200-day, it is traditionally seen as a bullish chart trend. Conversely, if the 50-day moving average is trading below the 200-day, it is traditionally labeled a bearish trend or bearing.

In this case, for QUAD, that adds up to a bullish designation, which suggests that flows have been working in an overall positive direction on the chart. With that established, the question now turns to whether or not key indicators suggest the action has pushed too far too fast, leading to a statistically likely mean-reversion probability going forward.

For that, we rely on our key overbought/oversold oscillators. There are many out there, but we prefer the 14-day Relative Strength Indicator (RSI) and the 20-day ?fast stochastic?. For both of these measures, if we see a score above 75 (overbought) or below 25 (oversold), history suggests one is wise to expect some reversion to the mean. For QUAD, the 14-day RSI shows a score of 76.68%, while the 20-day fast stochastic shows a score of 67.14%.

From there, we want to next turn our attention to relative performance and volatility scoring, or Beta. Quad/Graphics, Inc. has moved +3.50 over the past month or so. Over the trailing 100 days, the stock is outperforming the S&P 500 by 9.66.

This movement has come on a more volatile bearing from one day to the next relative to the broader market, according to the stock?s 36-month beta. In addition, we can see that the stock?s recent action has come on a historical volatility score of 84.27% (as indicated by taking the standard deviation of returns for a random trading input assuming buying the stock at a given average price during the specified period). Furthermore, the 20-day ATR as a percentage of the 20-day moving average grants another key view into relative volatility scoring. By that measure, we reach a score of 4.45%.

That brings us neatly to an examination of key levels of support and resistance on the chart. For this, we generally bias toward range markets, fib levels, and moving averages. In any of these cases, it?s important to understand that the concept of support and resistance is a bit like what we might call ?social gravity?. It?s a game theory concept. It?s the point where people assume other people will be acting.

Keynes called this type of logic the beauty contest. The idea is based on a fictional newspaper contest in which people are asked to pick which of a series of pictures of women?s faces will be the most popular picks for ?most beautiful?. Given that the winner will be someone who guesses what other people picked the most, the goal has nothing to do with picking the most beautiful face. It is figuring out which picture the most other people will think the most other people will think is the most beautiful. This is called ?recursive logic?. And it forms the basis for key support and resistance in markets as well.

In short, popular meeting points on the chart tend to be established either where they have been before (range extremes), or at key Fibonacci levels or moving averages. In this case, the critical 38.2% level drawn off the 52-week high of $29.04 sits at $24.88. QUAD also has additional resistance above at the stock?s 200-day simple moving average, which sits at $ 22.08.

Lastly, we need to quickly cover relative volume. Here, we want to examine relative volume measures to get a feel for interest in the stock of late. Right now, this stock has been showing strong relative volume, which indicates interest among those making a market for shares of the stock, and that should be seen as a key factor in drawing conclusions about your level of interest as well.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of argusjournal.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please click HERE

Anthera Pharmaceuticals Inc. (NASDAQ:ANTH) could crash and here’s why

It’s time to take an in-depth technical look at Anthera Pharmaceuticals Inc. (NASDAQ:ANTH) . Our goal here today is to examine how the stock is behaving so we can use that examination as a lens through which to evaluate the stock as a possible investment opportunity.

Technical analysis is predicated on the idea that all important information is already interpolated by buyers and sellers of a security, so the only thing left to really interpret and predict the action is that behavior itself. For market timers, one of the most important tools we have at hand is the key indicators that show whether the stock is stretched in one direction or the other too much, too far, or too fast. In other words, is the stock overbought, oversold, or somewhere in the middle?

For that, we first turn to the RSI measure. The 14-day RSI is the standard flag-bearer for this type of analysis. Right now, for Anthera Pharmaceuticals Inc., the measure stands at 79.68%. That shows where the stock is as far as the degree to which it is becoming overbought or oversold relative to its price history.

If we look at other overbought/oversold oscillators, we can get even more perspective. The stochastic measure is a good example. Right now, the stock over the past month of action shows a score of 67.22% on the 20-day fast stochastic.

In an even broader sense, NASDAQ:ANTH has recently been showing trading action that suggests an overall bearish posture on the chart according to trend-related measures such as a major moving average. In this case, we are looking at the relative positions of the 50-day and 200-day simple moving averages. The implication, of course, is that money is generally treating this stock in a negative manner in terms of capital flows.

Next, we want to look at participation levels. Our conviction on a stock in terms of its technicals is almost entirely subject in the end to the type of volume of trade we see going on in the stock. Patterns of action gain meaning strictly through volume levels. In other words, you need plenty of people playing the game for the score to matter. At this point, relative volume measures have been weak, indicating lack of interest among traders, investors, and money managers for the stock over the past month. As it stands at present, the stock might find important action around key levels on the chart, which is something else we like to take a close look at.

One of the best ways to define key levels is through derivations built off of the Fibonacci series. This is widely used by professional firms in the market. The Fibonacci series is a set of numbers derived from adding the prior number to the next one: 0,1,1,2,3,5,8,13,21,34, etc. You will note that each number is the sum of the prior two numbers. The series has been found to exemplify the mathematics underlying many growth systems. The ratio of one number to the next in the series approaches 61.8% (or 38.2%, depending on which direction you move) as a limit. In markets, the key levels are often played at retracements defined by this ratio and its associated connections. In this case, the critical 38.2% level drawn off the 52-week low of $1.20 sits at $3.13. NASDAQ:ANTH also has additional resistance above at the stocks 200-day simple moving average, which sits at $ 1.62.

So far, we have looked at oscillators, moving average trends, and participation levels. However, sometimes, there is information carried in simply the degree of movement in a stock. For example, over the past trading month, NASDAQ: ANTH has made a move of +1.12. By comparison, over the trailing 100 days, the stock is outperforming the S&P 500 by 74.75, and its gotten there by action that has been more volatile on a day-to-day basis than most other stocks on the exchange.

Obviously, that tells us a ton about this name. To even drill down deeper into the movement, we can see that the stocks recent action has come on a historical volatility score of 180.95%. That number is derived from the standard deviation of returns of some hypothetical trader buying the stock at a given average price during the specified period. If we want to look at the range of action in a simplistic sense, the best way is to use the average true range over the most common reference time period, so we are staying on the same page with the market. In this case, the 20-day ATR as a percentage of its 20-day moving average comes in at 10.47%.

We plan to update our take on this stock as its pattern of behavior progresses from here.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of argusjournal.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please click HERE